The Western European mobile phone market shrank in the first quarter of 2013 due to a lower than expected slowdown in the smartphone shipments, according to International Data Corporation (IDC). Total shipments dropped 4.2% year on year to 43.6 million units, according to IDC’s European Mobile Phone Tracker, published in May 2013.

The feature phones segment continued to lose ground as consumers adopt smartphones. Shipments fell 31% year on year to 12 million units. The smartphone segment also lost some steam in the first quarter. Shipments increased 12% year on year to 31.6 million units in the quarter, which was the lowest growth rate since IDC started tracking the mobile phone market in 2004.

Most Western European countries experienced a slowdown in smartphone sales as economies deteriorated, with a consequent decline in disposable income for consumers. Mobile operators are also cutting handset subsidies to reduce their costs as revenues decline. This is particularly impacting the Southern European economies, where consumers refrain from replacing their mobile phones for longer periods. In Northern Europe, smartphone penetration is reaching a tipping point, which has started to impact the smartphone growth, as most users already have a smartphone and will not replace it until the contract ends or the device breaks.

In Western Europe, phone makers are facing the most challenging time ever; the economic environment is impacting demand, while users are buying cheaper handsets, which impacts manufacturers margins.

“We are now entering the second wave of smartphone adoption in the region. The first wave was driven by those users looking for devices that would meet their mobility needs. They did look for the best devices in terms of performance and user experience, and more importantly, they were able to afford and pay a premium to get a premium experience. We are now entering the second wave of smartphone adoption, which will be driven by those users with no need for a smartphone,” said Francisco Jeronimo, European mobile devices research director at IDC. “These new users are looking to replace their current feature phones with another feature phone, as smartphones are fancy gadgets that they don’t feel the need to have. However, when they go to a phone shop most of the options available are smartphones only; their friends, colleagues and family may have smartphones and are always talking about the latest apps, and the cheapest smartphones they note are most likely to be as low in price as the last feature phone they bought. With a small push from sales people, the sale is almost guaranteed. But they will buy one of the cheapest smartphones as they still see no value for money.”

In terms of operating system, Android continues to dominate the smartphone landscape. In the quarter, Google’s OS shipped 21.9 million units and market share increased to 69% in 1Q13 from 55% in last years’ first quarter. Apple’s iOS continues to lose ground as market share declined to 20% from 25% in 1Q12. Windows Phone improved its position to become the third biggest OS in the region, but it still represents a tiny percentage of the smartphones shipped. Its market share rose to 6% in 1Q13 from 4% in 1Q12.

Top Western European Mobile Phone Vendors, Total Shipments and Market Share, 1Q13 Smartphones and Feature Phones (Units in Millions)Source: IDC European Quarterly Mobile Phone Tracker, May 2013

Top Western European Mobile Phone Vendors, Shipments and Market Share, 1Q13 Smartphones (Units in Millions)Source: IDC European Quarterly Mobile Phone Tracker, May 2013

Not at all, but if the increases in sales that are contributing to Apple’s percentage drops are to customers buying cheap phones which earn little to no profit (or even a loss) then the percentage figures mean nothing.

As was proven with the Mac, low market share is not an issue if you are making all the profits. It is actually desirable since you have less customers to support and thus lower ongoing costs. If your market share is too small then it can be a problem because your customers are going to be eroded more easily.

These figures could be quite meaningful, but only when viewed in the proper context. The market is not made up identical customers, most new customers are now at the low end, customers who perhaps don’t need/want a smartphone but are getting one almost by default and as a result are getting a cheap one.

I’d rather sell a few of an item for a million dollars and have a fraction of a percentage than sell a million for 1 dollar and have virtually 100% of the market.

Obviously Apple’s problems lie not at their lack of innovation, but rather to the impending European economic meltdown and their silly liberal economic policies. Bad thing is, we are not that far behind them. Fortunately Apple has the means and resources to weather. Last big recession, Apple hunkered down, doubled down on their design and research initiatives and created the future. They can do it again.

Problem is that Samsung is increasing its share in the same market conditions. Even if many of those are lower quality/range phones fact is that they are getting closer in numbers at the top too. If share sinks too low they will be unable to force feed the technical innovations (that are iOS specific) to the carriers/businesses that they need to. Perception is everything and as with the PC businesses will be more than happy to ignore Apple if they see them becoming less relevant.

Yawn. Nothing more than the calm before the storm. Come 2014, the iPhone Plus takes over the world. Jony Ive will destroy the big phone circus and show them who owns the high end smartphone crown. Then Hannibal Ive will attack from the back end with an iPhone Lite that goes after the lower middle class folks transitioning from feature phones in nations that don’t live and die by contracts and subsidies. The big cats aren’t dead quite yet… Apple comes roaring back like a lion next year. Guns blazing. Blood everywhere. Tywin Ive has a Red Wedding planned for these thieves.

Either way Apple has been caught on the hop by not being flexible enough just thinking it can sit at the very top end. When 20 year plus loyal buyers like me have to consider an HTC because I simply cant warrant paying for an iPhone (older or not) then that is bad planning. Im waiting for a bit longer in the hope this may change but as my present phone is on its last legs September is the latest.

Given Apple’s has a penchant for miniaturization and use of advanced chips and manufacturing materials & methods to continually lower costs.

Apple is in line to come out with a viable lower cost model to meet the more casual smartphone user which, by all accounts of lower internet usage by Adroid folks, aligns with a majority of users.

Apple has routinely done at least 2 models of each of its main products, so I don’t think this is unreasonable.

My pure guess as someone who has carried a cell phone since the 1980s is that it will be a phone of the same height as the iPhone but narrower. This would allow screen use but in a bit more restricted way. You wouldn’t normally want to look at photos or video clips on it. That is what my iPad and MBPro are for.

What always happens when Apple is about to release new products. People hold back for there release. This happens every year and is not a news story except for those that want to sensationalize it as Apple’s down fall or something when it’s not! People are now starting to wait for the next iPhone so naturally sales will start to drop. Reality check for those doom and gloom forecasters is that sales will skyrocket this fall, imagine that.

Foxconn is reported to be down 15% when they had projected to be up 12% this year. Clearly Apple is selling far less iPhones than had been thought. Thus the market is ahead of the curve. As I have been saying for past three months, AAPL will be dropping until it has a new phone, and not just a slightly changed 5 S, but a real new phone. iCal me, huh?